Derek Whitton Photo

Wedding

Cost Of Doing Business (CODB) for photographers

What should I be charging for my photography? A question I frequently see raising itself on forums and in conversation. This applies whether you are a hobbyist, seasoned veteran or about to get your first paying job (high five if this is you). Now there are many thoughts about the subject of pricing and while all have different approaches, one thing remains the same… You NEED to know your Cost Of Doing Business (CODB). Simple, isn’t it? Well, we need to delve deep to ensure that you have all the correct information you need to accurately calculate your Cost Of Doing Business.

What if I told you, what you are charging is probably not enough? To show you this, I need to go back to the foundation so that we can build the walls correctly. How did you get the price you are currently charging? Did a ton of research? Thumb suck? Guestimate? Looked at a bunch of others photographer’s pricing and just slotted yourself somewhere in the middle? If you are like me, you kind of just guessed by looking at what others charged and went with that. In my mind, that seemed pretty reasonable and I figured I could really make a comfortable living doing this at super low prices, the masses would flock in because I had adequate images and cheap rates. Boy, was I wrong. I had never factored in things like future equipment purchases, repairs, education, insurance, software… I’m getting ahead of myself here. We will cover it all, I promise.

At your day-job you currently earn R163 an hour? So if you can charge R500 an hour, you can triple your income. How awesome is that? I mean, all you are doing is charging for your time? Well kind of. You are billing for that 1 hour portrait session, but did you forget the 30 minutes it takes to drive there or the 2 hours you spend culling and editing or even the 30 mins you spent consulting with the client? That’s four and a half hours you spend on a one-hour session, and this excludes prep and any other cost associated with that one session. You are tempted to say , but Derek, that is still R200 more than I would make at my job. You don’t know that, because all you have done so far is hope you are making a profit.

I can already hear the eyes rolling: “I’m a creative mind, I can’t do this kind of stuff”. We will keep this simple, and I hope by now that you are beginning to see the light, and/or you just want me to get on with it and teach you how to calculate this for yourself.

How to identify what you need to spend in your business.

Let’s break it down into bite-sized chunks. This is what it will cost you if you have booked sessions or not:

Camera Gear and Accessories

Plan to acquire, maintain, repair, and, later on, replace your gear. Set aside a good portion to growth in a savings account. Camera bodies have a lifespan of around five years. Less if you shoot more.

Studio and/or Office Space

Whether it is an at-home space, or separate space, you need to factor in Bond/Rent, Rates and Taxes, Levies, insurance, maintenance, etc. When you have a portion of your home as home-base you add up all these cost and divide them by the square meter space that you have allocated to you office/studio.

Computer Equipment

Obviously, you will be needing at least one computer to do your job, but as you grow so do your expenses. You will then need to factor in additional computers, monitors, tablets, scanners, printers, colour calibrators, external hard drives, mouses (interesting factoid, the plural of computer mouse is mouses, not mice ~ Gerry Pelser) and keyboards, etc. Granted you will not be replacing these every month, but factor in a time-line for what the replacement cost for each item is, and in what time frame you intend to replace them. Also remember hardware peripherals have a habit of giving up the ghost at random times, so you may need to replace that keyboard when you least expect it. You need to have a contingency for this.

Examples:

I want to replace my desktop computer every 5 years.

R30 000/ 60 months

= R500 per month that I need to put away to upgrade in 5 years time. (And that does not even factor in inflation!)

Cell Phones

I often hear “Nah, that’s on contract”. Great, but your business needs to pay for the portion it is using, even if it is a personal phone. Thus you need to calculate the cost of the contract INCLUDING the phone, and set that portion aside.

Maintenance and repair.

Include your computers, gear as well as the printers.

Internet

If you are using your home internet, use the same formula that you used for your square meterage percentage to get the contribution that your business should cover.

Calculate repayments, insurance, maintenance, licence fees, fuel and wear & tear. An important thing to remember is to keep travel logs if you are claiming from your business, as SARS will want to see what is business and what is personal. (Yes, you need to consider tax too!)

Set a goal for workshops and training that you would like to attend this year and add these to your CODB.

Marketing

This will include printed media as well as digital. You need to cover Networking events in this as well.

Accounting and Legal Fees

You will need to have an accountant do your audited financial statement every year. Didn’t think of that, did you?

Taxes

Do not overlook this expense as it can get you into some hot water.

Software

Adobe, accounting, and any other software related to your business.

Consumables

Things like coffee, tea and toilet paper have to be covered.

Salary (you do not work for free)

Be realistic here, you know what you need to survive and cover your obligations. If you do not have a personal budget, now would be a good time to do a cost of living too. If you are doing this as an additional income then the same applies, you need to pay yourself as if you were paying someone else to work in your business.

Let’s do the maths there

(These figures used here are for illustrative purposes only, and not factual. They do not represent a typical Cost Of Doing Business)

Expense

per Month

per Year

Camera gear and accessories

R7 000,00

R84 000,00

Studio and/or office space

R5 000,00

R60 000,00

Cell phones

R1 000,00

R12 000,00

Maintenance and repair

R1 000,00

R12 000,00

Website and hosting

R500,00

R6 000,00

Vehicle

R6 000,00

R72 000,00

Stationery and office equipment

R800,00

R9 600,00

Workshops and Training

R3 000,00

R36 000,00

Marketing

R1 000,00

R12 000,00

Accounting and Legal fees

R370,00

R4 440,00

Taxes

R6 000,00

R72 000,00

Software

R900,00

R10 800,00

Consumables

R500,00

R6 000,00

Salary

R30 000,00

R360 000,00

Total Operating Cost

R63 070

R756 840,00

Billable Units

Now that you have figured out what it cost you just to have a business each year, you need to now determine your billable units to determine what you should be charging to, at the bare minimum, BREAK EVEN.

What is a billable unit?

Well a billable unit is the measure of your service, it can be per hour, per day, per session, per event, per wedding, per headshot, per whatever it is that you do. It is often the amount of session time, including non-shooting time.

For this example we will use “per hour” as our billable unit. The only equal factor we all have in common is time. You need to decide how you are going to dedicate this time on billable activities including shooting. This will not include the time that you work ON your business, only the actual time you work IN your business. So let’s say you will work 40 hours a week, 25% ON your business and 75% IN your business leaving it a 10/30 hour split.

That means you have a maximum of 1,560 billable units per year (30 hours x 52 weeks).
You will obviously want some time off for vacation conference, workshops, etc. Let’s say 21 days, or 3 weeks. That takes your billable units down to 1,470 (1,560 – 90). You will also need to account that you will not be booked 100% of the time, so you are a marketing machine and you are booked 70% of the time leaving you with 1,029 billable units.

Now you can calculate your Cost Of Doing Business by Billable Units.

Cost Of Doing Business = R756,840 / Total Billable Units = 1,029

= CODB per Billable Unit of R735.51

Now, It’s time to calculate what you should be charging!

One Hour

Half Day

Full Day

Shooting Time

1 hour

4 hour

8 hour

Traveling

½ hour

½ hour

½ hour

Culling/editing/printing

2 hour

6-8 hours

12-16 hours

Meetings

1 hour

1 hour

1 hour

Admin

½ hour

½ hour

½ hour

Billable Units

5

12

22

Determine the CODB For the service you provide

Billable units x CODB per Billable unit = CODB per Session

1 hour Session

5 x R735.51 = R3,677.55

Half Day

12 x R735.51 = R8,826.12

Full Day

22 x R735.51 = R16,181.22

(These figures used here are for illustrative purposes only, and not factual. They do not represent a typical Cost Of Doing Business)

Develop your pricing strategy.

Now that you know what you need to charge just to break even, you need to develop your strategy around this. Do not get caught up comparing your prices to others. Worry if you are charging enough to run a profitable business. Being creative does not mean that you have to be starving. Do not feel bad about charging your rate, and if you cannot come to terms with the amount you NEED to charge, it might be time to get back behind that corporate desk.